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This article is written by Riya Gupta, pursuing a Diploma in Intellectual Property, Media, and Entertainment Laws from Lawsikho.com.

Introduction

“Aisi Waisi Dosti Nahi…Yeh no.1 yaari hai Yeh no.1 yaari hai”. If you have heard this song, then what product comes to your mind first? Whiskey or soda? If it is the former that comes to your mind then you are a victim of what is known as surrogate advertising.

Products like alcohol and cigarettes are not allowed to be advertised in India. When alcohol brands advertise alcohol under the garb of other products which are legally permissible to be advertised is when brands adopt the practice of surrogate advertising. 

Diageo India’s Mc Dowell’s No. 1 has been successfully doing this for many years. It has recently released an advertisement paying a tribute to “yaari” or friendship, targeting the younger population that puts camaraderie above everything else. The fact that even though the ad nowhere talks about the brand’s whiskey, that is all that is implied in our minds when we watch the ad, is intriguing and an issue that needs to be addressed.

What is shown in the advertisements?

McDowell’s ads focus on nostalgia, memories with childhood friends, travelling together, celebrating, and trusting. The only product of McDowell that is shown in its advertisements is their premium soda which is ostensibly being advertised. While the ‘No.1 Yaari Jam’ YouTube channel hosts a variety of music videos released under the brands’ umbrella, Facebook, Instagram, and Twitter are used to walk the talk and generate platform-specific content for the fans. McDowell’s No.1 has been all about generating conversation on social media, from extending festival greetings to crafting an occasion-led content plan that mixes the product’s power with some moment marketing. The advertisement can be viewed here-https://www.youtube.com/watch?v=uvX-zMUW5mQ&t=8s.

What is the impact on consumers of this advertisement?

When consumers watch this advertisement, they resonate with its theme and music and it gets etched in their minds. Due to this reason, even though the advertisement nowhere mentions whiskey but when somebody from the target audience purchases one, they would select the McDowell brand and that is how the sales of this brand’s signature whiskey exponentially grow by just advertising soda.

Is this legally permissible?

Cable Television Network Rules, 1995

The Ministry of Information and Broadcasting (MIB) of India issued an advisory to private satellite TV channels, instructing them to ensure that liquor, tobacco, and other intoxicants are not advertised directly or indirectly on their channels, in violation of existing law, namely the Cable Television Network Rules, 1995(CTNR). Satellite TV stations are forbidden from airing advertisements that encourage the sale or use of cigarettes, liquor, wine, or tobacco goods directly or indirectly under the CTNR.

However, under the CTNR, advertising of brand extensions of liquor and tobacco products is allowed, as long as the product sold under the brand extension makes no direct or indirect references to the prohibited product or contains any nuances or phrases promoting prohibited products, and the advertisement does not use specific colours, layouts, or presentations associated with prohibited products. The product should also be offered in a large number of outlets and distributed in a fair amount, and the projected advertising cost for the brand extension product should not be disproportionate to the actual sales turn-over of that product. All ads that meet these requirements and are determined by the Ministry of Information and Broadcasting to be real brand extensions must be evaluated and certified by the Central Board of Film Certification as appropriate for unrestricted public screening.

ASCI’s Code of Self-Regulation

By amending CTNR, the enforcement of its provisions has been assigned to the Advertising Standards Council of India (ASCI), a self-regulatory industry group that forbids Television channels from airing any advertisement that breaches ASCI’s Code of Self-Regulation in Advertising (ASCII Code). The ASCII Code includes a section titled “Guidelines for Qualification of Brand Extension Product or Service,” which lays out the criteria for what qualifies as a brand extension and what does not.

According to the ASCII Code, for an advertisement to qualify as a genuine brand extension advertisement (i.e., not a surrogate advertisement), the product sold under the brand extension must have at least 10% in-store availability of the leading brand in the product category OR the product’s annual sales turn-over must exceed INR 5 Crore (50 million) or INR 1 Crore (10 million) in that state where this product is distributed. By Indian standards, this is a fairly high bar, and many prominent businesses, even those who produce music CDs, have failed to meet it. As a result, alcohol and tobacco product marketing have resorted to the internet to promote brand expansions. This is largely due to the fact that the CTNR does not apply to ads on the internet, there are no clear rules for online content control, and ASCI did not actively track commercials on the internet until recently.

Consumer Protection Act, 2019

The Central Consumer Protection Authority (CCPA) has the authority under the newly notified Consumer Protection Act, 2019 (CPA) to investigate manufacturers and service providers for misleading advertising and impose penalties of up to INR 10 lakh (1 million) for the first violation and up to INR 50 lakh (5 million) for subsequent violations. Because the scope of advertising covered by the CPA includes advertisements on the internet and in electronic media, it would also include misleading advertisements produced on the internet or in electronic media. 

Central Consumer Protection Authority (Prevention of Misleading Advertisements and Necessary Due Diligence for Endorsement of Advertisements) Guidelines, 2020 

These Draft Guidelines were recently issued by the CCPA to explain what it considers to be misleading advertising. Surrogate advertising is deemed misleading under it and hence will be prohibited if the Draft Guidelines are adopted. Brand extension is an exemption in the Draft Guidelines. Only if the advertisement is created and distributed in reasonable quantities, taking into account the volume of the advertising in issue, the media utilised, and the markets targeted would a brand extension advertisement be authorised. In the lack of any definition on what constitutes “reasonable quantity,” the CCPA is likely to look to the ASCII Code to establish what is “reasonable” for the sector; after all, ASCI is the industry’s self-regulatory organisation. If that happens, the high existing ASCII Code standards for determining the “genuineness” of brand extension advertisements would be expanded for determining “misleading advertisement” under the Consumer Protection Act, 2019, potentially making brand extension advertising even more difficult in India.

Cigarettes and Other Tobacco Products Act, 2003

COTPA has the primary goal of protecting young children and passive smokers from tobacco addiction. This legislation is in accordance with Article 47 of the Indian constitution’s Directive Principles of State Policy. Advertisement, as defined under the act, comprises visual representations in the form of notices, labels, wrappers, and circulars, as well as spoken or written announcements. Tobacco goods, in particular, are frequently promoted under the name of a different brand. This statute regulates and prohibits such ads. The statute also makes it illegal for anybody to advertise cigarettes or tobacco products in any way. Section 5(1)(a) was amended in 2005 to include indirect advertising as well which is defined under the COTPA Rules 2005 as the use of a name or brand of tobacco products for marketing, promotion, or advertising other goods, services, and events as well as the marketing of tobacco products with the aid of a brand name or trademark that is known as, or in use as, a name or brand for other goods and service. Thus it covers the idea of surrogate advertising in its entirety.

Judicial response to surrogate advertising in India

Various adjudicating agencies in India have interfered in the cases of surrogate ads being broadcast in the media, ordering the enterprises to remove the adverts and imposing fines on them.

In United Breweries Limited vs Mumbai Grahak Panchayat (I (2007) CPJ 102 NC), the Mumbai Grahak Panchayat filed a complaint against the appellant as well as Western Railway for engaging in Unfair Trade Practices by prominently displaying/ exhibiting false, misleading, and surrogate Liquor Advertisements on the coaches of Western Railway trains and seeking discontinuance of the same. United Breweries manufactured Bagpiper, London Pilsner and Derby Special Whisky and Beer. The said advertisement made a claim of “India’s No. 1 and the World’s No. 3”. This is a description for “Bagpiper Whisky,” not “Bagpiper Soda.” Bagpiper Soda was not available in the market. The second advertising is for “London Pilsner Soda,” which describes a 250 mL pint of “Soda” for Rs. 16, and when contacted, it was revealed that “London Pilsner” has released a 250 mL bottle of Beer. A bottle of 250 mL London Pilsner Soda beer costing Rs. 16 had been purchased by the complainant’s volunteers. “Ab Cold Drink Out,” said the London Pilsner advertisement on a train.  This was an attempt to get the younger generation to drink beer instead of soft drinks.

A third advertisement for “Derby Special Soda” appeared. On further investigation, it was discovered that there was no Derby Special Soda on the market, but that “Derby Special Whisky” was available via Wine Dealers. The complaint addressed the Railway Authorities, but they ignored their request to halt the advertisement, claiming that agreements had already been signed. Dissatisfied with the response, a complaint was filed with the State Commission against the appellant and Western Railways, requesting that the impugned advertisements of Bagpiper, London, Pilsner, and Derby Special Soda be removed from Western Railway trains as an Unfair and Deceptive Trade Practice. The Advertising Standards Council of India was also contacted about the disputed commercials of Bagpiper Soda and London Pilsner. The complaints were upheld by the Advertising Standards Council of India and the Council held that the advertisement is misleading by ambiguity, a surrogate advertisement for an alcoholic beverage brand, and contravened the Advertisement Code. A written request was also made to the advertiser to withdraw the advertisements.

In Re: Mcdowell And Co. Ltd. vs. Unknown, the Monopolies and Restrictive Trade Practices Commission ordered an investigation into an advertisement that ran on page 66 of The Illustrated Weekly of India on November 23, 1986.  McDowell & Co., a company that makes whiskey, cologne, and other items, is alleged to have inserted and published the ad to boost the sale of whisky it produces, despite the fact that it appeared to be about cologne. The commercial featured a bottle with the words “McDowell’s Diplomat Cologne” inscribed on it. Ms Dimple Kapadia, a Bollywood actress, was featured in the same commercial. The comment beneath the photo said, “What makes him my choice is his choice… Diplomat.”

The Commission came to the preliminary conclusion that, while the advertising appeared to relate to cologne, it misled readers into believing that the message was about the high quality and utility of whisky made by it under the brand name “Diplomat.” Furthermore, the advertisement’s description created the idea that Ms Dimple Kapadia favoured individuals who drank “Diplomat” whisky. It also provided the wrong idea about “Diplomat whisky” quality and utility. However, the commission decided that the disputed advertising was not a deception, but rather a case of “puffing up.” Neither the image of Ms Dimple Kapadia nor the caption beneath it can be held responsible for misleading any reader of the advertising or, for that matter, a consumer. The contested commercial makes no mention of whiskey, either indirectly or expressly.

Conclusion and suggestions

If all the conditions stated in the above-mentioned laws have been complied with by McDowell then these ads are only a part of brand extension as per law even though we all know in reality what these ads imply. This is the result of the lacuna in the law which makes the distinction between surrogate advertising and brand extension unclear. It is suggested that the following steps be taken to combat surrogate advertising:

  1.  Enacting clear and transparent regulations prohibiting the use of surrogate marketing for multiple items under a single brand name.
  2. Organizing consumer awareness programmes to educate people about the dangers of surrogate marketing.
  3. Giving the Advertising Standards Council of India additional authority so that it may take action against inaccurate and misleading advertising and maintain a close eye on legal evasion rather than merely issue notifications.
  4. Establishing a system to ensure that international and national regulations are effectively implemented and adoption of strict laws penalising the companies which undertake surrogate advertising
  5. Media and film firms should refuse to have alcohol or cigarette corporations support their events.
  6. Producers and exhibitors must run anti-smoking, anti-tobacco, and anti-liquor advertisements that are not funded or sponsored by the manufacturers of such products. 

References

  • Dodrajka, Sangeeta. “Surrogate Advertising in India.” Management and Labour Studies, vol. 36, no. 3, 2011, pp. 281-290.
  • Suryawanshi, Seema A. “The Study of Surrogate Advertising with an Indian Perspective.” Indian Journal of Applied Research, vol. 3, no. 10, 2013.
  • Varalakshmi, T. “An Empirical Study on Surrogate Advertisements: A Pioneering Trend.” The International Journal of Management, vol. 2, no. 1, 2013, pp. 1-17.
  • Bharadwaj, Rima. “Surrogate Advertisements: A New Judicial Concern.” Legalserviceindia.com, 2009.

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